Since the advent of gambling, people have tried to look for ways to increase their odds of success. This is regardless of the ‘nature’ of the gamble: horses, sports betting, dice, table games, or slots. Let us take a closer look at the various betting systems and how to use them.
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Understanding Gambling and Betting Systems
Naturally, most gamblers ‘aim’ or end goal is to walk away with a profit earned.
While some may hold alternative reasons for their interest in gambling – be it thrill or hobby, most people gamble with the aspiration of making money. Typically, the intention is to make as much profit as possible, as quickly as possible.
Since the advent of gambling, people have tried to look for mathematical probability, strategies, systems, and methods to increase their odds of success. This is regardless of the ‘nature’ of the gamble: horses, sports betting, dice, card games, casino games, or slots.
The explosion of online gambling in the last few decades has ensured that this is no longer restricted to those within specific social circles or those with access to physical casinos. Now that anyone can gamble or stake money from anywhere, the prevalence of those looking to make money off chance scenarios has rapidly increased.
With this increase comes the return of systems and strategies implemented for hundreds of years now being applied to online platforms. Professional gamblers strictly follow some of these systems and strategies, while others rely on mathematical probability to best determine potential outcomes.
We’ll take a closer look at the fallacies people tend to fall into when relying on these rules, along with presenting a comprehensive guide for understanding gambling and betting systems.
We should also establish what differentiates a “system” from a “strategy” and define key terms related to gambling in all forms.
The Gambler’s Fallacy or “Hot Hands”
Perhaps the most important thing to understand as a seasoned gambler or a novice is the “gambler’s fallacy.” Keeping this within your frame of mind while involving yourself in any betting or stakes is crucial.
The appeal of having a predetermined system to “help” people win money is alluring but will, more often than not, result in lost money.
The gambler’s fallacy essentially describes how people fall into the trap of believing “outcomes in random sequences to exhibit systematic reversals.” So, for example, some people will think a roll on red will follow a streak of spins on black. This fallacy is derived from the fallacious “law of small numbers” or “local representativeness.” This is such that a small or isolated sample should be representative or indicative of a much larger sizing.
This is closely linked to the idea of ‘hot hands,’ which is commonly linked to sports players as an allegory for being on a winning or scoring streak. However, this fallacy has bled over into the realm of betting and gambling too. You see this commonly within systems that advocate for rewarding a winning streak. These are called “progressive betting systems” or “positive progression” systems.
The belief here is that while on a winning or “hot” streak, one will continue to experience persistence rather than reversal. Unfortunately, studies demonstrate that there is no single study to reinforce or support these beliefs.
We can reword this more clearly: those who believe in “hot hands” expect winning streaks to continue, while those who believe in the “gambler’s fallacy” expect losing streaks to reverse miraculously. Outcomes from prior stakes or bets are thought to predict future results.
Of course, this is all to say it is possible to experience hot hands due to one’s gambling strategy or how they adjust their bets. This, however, has nothing to do with the probability of even money bets or adhering to a strict system.
Let us take a closer look at the various betting systems to understand why most systems will fail most players – the winners are the actual outliers.
Betting Systems Flat or “Fixed” Betting v. Proportional Betting (Kelly Criterion)
Those with some experience may be familiar with the amount of negativity towards the Kelly Criterion found online.
The Kelly Criterion is typically used to determine optimal bet sizing. This naturally means that you bet more when you have more edge and a higher chance of winning on a bet. Conversely, you bet smaller when your edge is lower, and there are lower odds of winning.
This would make perfect sense to most people.
For a more thorough understanding of the mathematics behind the Kelly Criterion, there are plenty of available guidelines for implementing the “real” Kelly Criterion.
Ultimately, you want to determine all the possible outcomes for each set of bets, calculate the probability of each outcome, and then calculate the ending bankroll for those possible outcomes. This means the starting bankroll plus all wins and subtracting all losses. You then take the logarithm of the ending bankroll from the previous step and use them to calculate their weighted average by the probabilities of the second step.
You then find the set of bets that optimize the numbers from the logarithms of the last step, and these are the optimal betting amounts under the Kelly Criterion.
To simplify it, if you have an edge of 10% on even odds, Kelly Criterion states to bet 10% of your total bankroll. Meanwhile, if this is the same 10% edge but at odds of 10-1, you would bet 1%.
We can also understand the Kelly Criterion using the following equation:
F = b x p – q / b
F = fraction of bankroll bet
b = odds paid on the wager (-110 = .91)
p = odds of winning (55% odds would be .55)
q = odds of losing (45% would be .45)
Unfortunately, within sports betting contexts, especially, the Kelly Criterion is volatile. As a result, any edge is likely smaller of a percentage than what is believed, and you can often be wrong in terms of calculations.
Betting, even when you have a positive edge, can stunt the growth and potential of your total bankroll.
Rather, we would recommend a flat or ‘fixed’ betting plan when implementing a large number of bets.
By instead betting with a fixed stake across a sample of games, you can further verify the accuracy of your system and better understand whether or not the system is profitable.
This is because the Kelly Criterion maximizes both profits and losses.
Negative Progression v. Positive Progression
The other aspect to address with the varying systems is how negative progression differs from positive progression. Anything that does not fall into flat/fixed or “proportional” betting will likely adhere to one of these systems.
With “negative progression” systems, you will always change your betting units (increase them) following a loss. Negative progression systems are much riskier (although both involve some risk). This kind of system advocates for recovering losses by increasing the stakes on losing bets in the hopes that the next bet will be a win.
The problem with negative progression systems is the damage they can do to your bankroll if you remain on a losing streak while attempting to chase a win. Winning streaks are also rewarded less because you decrease the amount staked after a win.
Some negative progression systems include the Martingale, the Labouchere, the D’Alembert, and the Fibonacci.
The Martingale is unequivocally the most popular of these systems; however, it is rarely used by professional gamblers – and for a good reason. Most online tables will have limits restricting your stake during a long losing streak without you being able to recover that money back.
While the Martingale may increase your chances of winning in the short term, the losses are likely to accumulate and outweigh any potential profit you have won.
The strategy is straightforward and requires the player to double the amount staked after every loss. For example, if you stake a base unit amount of $50 and lose that initial bet, you would increase the next wager to $100. When you win, you then return to your base stake amount. Of course, these systems also have to assume the casino has no house edge.
How does positive progression or “progressive” betting systems compare? While still dangerous to players, they tend to offer more of a security net by restricting the possible amounts that may be lost.
Positive progression systems often depend upon mathematical formulas and rely on a base unit amount being staked. A “unit,” in this sense, is the measurement of a given bet. It is determined based upon one’s bankroll and the amount they’re willing to lose, not gain. Once this is determined, you can establish your per-unit dollar amount. Generally, it is recommended to keep this within 1%-2% of your total bankroll.
If you have a total bankroll or “budget” of $1000, your base stake ‘unit’ should be $10 to $20 (maximum). Of course, this will depend entirely on your level of risk tolerance.
Positive progression systems can be implemented for any money bet casino game, sports betting, or horse racing. The principal is, to begin with, a fixed wager amount or ‘unit’ from a predetermined bankroll and then follows an established pattern based on the outcome of each bet.
In contrast to the negative, positive systems seek to ride the wave of wins and increase the amount staked for every win. You also bet smaller or decrease the amount on any losses. Many players will stop after a certain number of wins to ‘bank’ that amount and then restart from the base stake amount so they can curtail losses and keep the profit.
The theory is to maximize winning streaks while minimizing money lost on a losing streak.
The Paroli is perhaps one of the more popular examples of a positive system. This system requires you to set a base stake amount or ‘unit.’ Then, on a won wager, you increase the next stake by the amount of your base stake. If you lose, you revert to staking the base amount. For example, if you begin with a $10 stake on red in roulette, and you win – the following stake would be increased to $20.
Other positive systems include the Reverse Labouchere, the 1-3-2-6, and the Contra D’Alembert.
If you want to experiment with positive progression systems, we always recommend even money bets and focus on casino games like roulette, blackjack, dice, or baccarat. However, it should be noted that even positive progression systems do nothing to help increase your chances of winning long-term. In contrast to negative systems, the only benefit is that you’re much less likely to experience the same kind of financial loss from a bad streak.
Born to Win? Why Betting Systems Require Three Things
All betting systems, regardless of what someone will try to sell you, cannot consistently win or repeatedly provide “proven” results. The only way this would be possible is if three things are guaranteed in unlimited abundance: infinite money, an infinite bet size, and an infinite amount of time.
A cursory Google search will yield thousands of results for betting systems or gambling systems that promote a method, system, or ideology that promises guaranteed wins. Unfortunately, as one would believe – these are all absolute snake oil. Furthermore, most of these are fixated on casino games, as these con artists understand others will primarily be playing online.
That being said, after looking at long-established systems, we can also clearly show that even the most well-known methods are not concrete. For example, no system can 100% guarantee wins in the casino every time.
While professional gamblers can utilize their acquired skills or mathematical skills to derive wins regularly, they don’t stick to concrete systems and cannot guarantee unlimited wins 100% of the time. Card counting, for example, can provide an edge at physical casino tables, while analyzing player/team statistics can give an edge to sports betting.
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